Sep 21, 2018
Charities and Political Activities Part II
Torkin Manes LegalPoint
There is more news for Canadian registered charities and the regulation of their political activities. A draft of proposed amendments to the Income Tax Act (Canada) (ITA) (Proposed Legislation), together with a Backgrounder which provides historical context on the political activities of charities, was released by the federal government on September 14, 2018 (Release).
The Release closely follows the joint statement issued in August by the Ministers of National Revenue and Finance on charities and political activities (Joint Statement). The Joint Statement indicated that the federal government would be appealing the decision of the Ontario Superior Court in Canada Without Poverty v. Attorney General (Canada) (which effectively allowed charities to engage in an unrestricted amount of non-partisan political activities within their charitable purposes) and advised that the Proposed Legislation would be forthcoming. You can read our article on the Joint Statement here
The Proposed Legislation, if it is passed into law, would have the following implications:
- Charities could engage in unlimited non-partisan political activities which are “ancillary and incidental” to their charitable purposes – charities would no longer be subject to the quantitative limits on non-partisan political activities previously imposed by the Canada Revenue Agency (CRA) (that is, no more than 10% of their resources);
- Charities would still be prohibited from devoting resources to partisan political activities (that is, “the direct or indirect support of, or opposition to, any political party or candidate for public office”); and
- Charities would still need to be created and operated exclusively for charitable purposes, and could not have political purpose(s).
As mentioned in our article on the Joint Statement, if the Proposed Legislation becomes law, it would apply retroactively to CRA audits and objections relating to political activities that are currently suspended.
The Release indicated that the Proposed Legislation will be open for public comment for a 30-day period until October 13, 2018, following which the government will introduce it “at an early opportunity.” Once introduced, the Proposed Legislation will have to pass through the legislative process in the House of Commons and the Senate, which can be lengthy and unpredictable. Interestingly, the Release did not mention the appeal of Canada Without Poverty, so the specific nature of the federal government’s objections to that decision remain indeterminate.
So where does this leave charities? Since there is no certainty as to when or even if the Proposed Legislation will become law or what the results of the appeal of the Canada Without Poverty case will be, charities should remain cautious about changing the way that they engage in political activities until the landscape is clearer.
We will be closely following the developments on the Proposed Legislation and the outcome of the appeal in Canada Without Poverty. We would be happy to answer any questions that charities have about engaging in political activities.